Monday, May 12, 4:45 PM EDT (Thomson Financial): Latin American stocks
tumbled as investors continued to take profits amid worries about rising
global inflation and U.S. interest rates. Brazilian shares were further
pressured by some lackluster earnings news from local corporate giants.
Brazil's Bovespa Index dropped 940.52 points, or 2.34%. Mexico's
benchmark Bolsa Index fell 432.77 points, or 2.05%, while Argentina's
Merval Index lost 54.93 points, or 3.04%.
Brazilian stocks sank, as investors digested a mixed batch of local
earnings reports and continued to fret over the outlook for U.S. interest
rates. On the earnings front, aircraft maker Embraer said late Friday that
its first-quarter net profit plunged to 86.9 million reais from 233.8
million reais a year earlier, missing expectations. Results were hurt by an
appreciation of the real and a drop in deliveries.
Meanwhile, oil giant Petrobras late Friday said its first-quarter net
profit rose 33% from a year ago to 6.68 billion reais but missed analyst
estimates. Results were hurt in part by higher taxes.
Banco do Brasil SA today posted a record first quarter net profit of
2.343 billion reais, up sharply from 965 million reais a year ago and above
market forecasts. Results benefited from growth in the bank's client base.
Elsewhere, Mexican shares dropped for a fourth straight session on
continued profit taking amid worries that U.S. interest rates will rise
higher than initially expected.
Before the recent bout of profit taking Mexico's bolsa had risen
strongly on optimism about local economic and earnings growth. In a sign
the economy remains on solid footing, the Finance Ministry reported today
that Mexico's industrial production surged 9.7% in March from a year
earlier.
Argentine issues followed the region's descent into the red amid profit
taking and concerns about rising U.S. interest rates and global inflation.
On an up note, a major investment bank upgraded Argentina to
"outperform" from "marketperform." "We have been surprised at the staying
power of Argentina's recovery, and believe that the economy still has
significant impetus, as long as commodity prices remain high," the bank
said.
-- Paul.Davee@thomson.com; Thomson Financial Corporate Services
This is Thomson Financial Corporate Services Latin American Commentary.
The information herein is believed to be true and accurate, we take no
responsibility for inaccurate information and reserve the right to update
our reports. If you have any questions please e-mail James Sang at
james.sang@tfn.com or call 646.822.6233. For more information about Thomson
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SOURCE Thomson Financial Corporate Group
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